Residential sales prices remained stagnant in the fourth quarter of 2020 with a drop of 1.2 percent bringing the annual rise in prices over 2020 to just 0.17 percent.
Stagnation in price growth over the year was attributed to a fall in apartment prices that fell by 4.6 percent on average during the past year while both detached and semi-detached houses retained positive price growth.
Within the apartment segment, Kileleshwa and Kilimani saw the biggest quarterly and annual fall in sales prices at 2.6 and 2.8 percent for Kileleshwa and 9.9 and 8.6 percent for Kilimani.
As at the end of 2020, Kilimani and Kileleshwa accounted for 28 percent and 17 percent of the sales property mix or a combined 45 percent, effectively making them the source of nearly half of property supply in Nairobi according to HassConsult.
”Against this backdrop, the loading of extra costs onto developers, as soaring land prices and sky high finance costs, has served in shifting developers to create smaller apartments with lower price tags to allow buyers to continue to access their products at a price that works for both buyer and seller. This shift in supply has led to suburb wide apartment repricing,” said Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult.
On the rental market segment, residential rental prices grew by 1.1 percent in the quarter, despite a fall in apartment rents of 1.24 percent in the same period.
Again, apartments in Kilimani showed the strongest fall in quarterly rents at 4.0 percent followed by Kileleshwa, recording price falls of 2.6 percent over Q4. The annual corrections amounted to a fall of 9.4 percent in Kilimani and a fall of 8.4 percent in Kileleshwa over 2020.
”While smaller apartments dominate the new build market in Kilimani and Kileleshwa and provide middle income housing at lower ticket prices, the sheer volume of new stock created rental price vulnerability for larger and older stock during the economic slowdown caused by 2020’s global pandemic, resulting in rental price corrections,” said Ms. Hassanali.
A year in review of rental prices showed an uptick of 5.5 percent in the year, and was led strongly by the increasing rental prices for detached houses – up 7.3 percent in 2020, with Karen and Muthaiga particularly showcasing high-end market resilience to economic slowdowns.